Rat brain cytosol contains proteins that markedly inhibit the activity of partially purified brain membrane phospholipase D (PLD) stimulated by ADP-ribosylation factor (Arf) and phosphatidylinositol 4,5-bisphosphate (PIP2). Sequential chromatography of the brain cytosol yielded four inhibitor fractions, which exhibited different kinetics to heat treatment at 70 degrees C. Purification of heat-labile inhibitors yielded two proteins with apparent molecular masses of 150 kDa and 165 kDa, respectively. The 150-kDa protein was identified as synaptojanin, which is a nerve- terminal protein that has been implicated in the endocytosis of fused synaptic vesicles and shown to be a member of the inositol polyphosphate 5-phosphatase family. We demonstrated that synaptojanin hydrolyzes both the 4- and 5-phosphates of PI(4,5)P2 and the 4-phosphate of PI(4)P, converting both compounds to phosphatidylinositol. The inhibition of PLD by synaptojanin is attributable to its ability to hydrolyze PI(4,5)P2: Synaptojanin did not inhibit PLD in the absence of PI(4,5)P2, and the extent of PLD inhibition was related to the extent of PI(4,5)P2 hydrolysis in substrate vesicles. The 165-kDa protein was identified as clathrin assembly protein 3 (AP-3). A bacterially expressed fusion protein of glutathione S-transferase and AP-3 also inhibited PLD with a potency equal to that of brain AP-3. AP-3 also binds inositol hexakisphosphate (IP-6) with high affinity and consequent loss of its clathrin assembly activity. However, IP-6 did not affect the ability of AP-3 to inhibit PLD. AP-3 was shown to bind to lipid vesicles containing PI(4,5)P2 with low affinity, but it did not bind to lipid vesicles lacking PI(4,5)P2. The binding of AP-3 to PI(4,5)P2-containing substrate vesicles was not responsible for PLD inhibition, becuase the potency and efficacy of AP-3 as an inhibitor of PLD were similar in the absence and presence of PI(4,5)P2. The fact that synaptojanin and AP-3 are synapse-specific protein indicates that the PLD inhibition by synaptojanin and AP-3 might play a regulatory role that is restricted to the rapid cycling of synaptic vesicles.